What do the latest consumer prices say about the housing market?

By Gerv Tacadena
31 Jan 2019

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Consumer prices during the final quarter of 2018 managed to surpass projections by market watchers and economists for the first time in two years. But what does this say about Australia's housing market?

Australia recorded a 0.5% increase in the consumer price index over the December quarter, bringing the overall annual rate to 1.8%.

Real Estate Institute of Australia (REIA) president Adrian Kelly said the CPI figure is good news for home buyers and renters.

"The annual changes for the analytical series of trimmed mean and for the weighted median were 1.8% and 1.7%, respectively. The annual changes in the trimmed mean have been below 2% since March 2016 and suggest the continuation of historically low official interest rates for some time yet," he said.

Consumer prices under the housing group rose by 0.2% for the quarter and 1.5% over the year, thanks to a strong showing in the gas and household fuels and maintenance and repairs segments.

Rents also increased over the quarter, up by 0.2%. On an annual basis, rents increased by 0.5%.

Kelly said the increased investment in housing has resulted in the lowest growth rate in rents since 1995.

"As we enter an election year, [this] is clear testament that the current taxation arrangements benefit renters and that any change in the treatment of negative gearing and capital gains tax would see an increase in rents," he said.